-
The informal markets of Africa
are stereotypically seen
-
as chaotic and lackadaisical.
-
The downside of hearing the word informal
-
is this automatic grand
association we have,
-
which is very negative,
-
and it's had significant consequences
and economic losses,
-
easily adding --
-
or subrtacting 40 to 60 percent
of the profit margin
-
for the informal markets alone.
-
As part of a task of mapping
the informal trade ecosystem,
-
we've done an extensive literature review
of all the reports and reseach
-
on cross-border trade in East Africa,
-
going back 20 years.
-
This was to prepare us for field work
to understand what was the problem,
-
what was holding back informal trade
in the informal sector.
-
What we discovered over the last 20 years
-
was nobody had distinguished
between illicit,
-
which is like smuggling or contraband
in the informal sector,
-
from the legal but unrecorded,
-
such as tomatoes, oranges --
-
fruit.
-
This criminalization,
-
what in Swahili refers to as "Biashara,"
-
which is the trade or the commerce,
-
versus "Magendo,"
-
which is the smuggling or contraband.
-
This criminalization
of the informal sector,
-
in English,
-
by not distinguishing these aspects,
-
easily can cost each African economy
between 60 to 80 percent addition
-
on the annual GDP growth rate
-
because we are not recognizing
-
the engine of what keeps
the economies running.
-
The informal sector is growing jobs
at four times the rate
-
of the traditional formal economy,
-
or "modern" economy, as many call it.
-
It offers employment and income
generation opportunities
-
to the most "unskilled"
in conventional disciplines.
-
But can you make a french fry
machine out of an old car?
-
So, this, ladies and gentlemen,
-
is what so desperately needs
to be recognized.
-
As long as the current assumptions
hold that this is criminal,
-
this is shadow,
-
this is illegal,
-
there will be no attempt at integrating
the informal economic ecosystem
-
with the formal or even the global one.
-
I'm going to tell you
a story of [Teresea],
-
a trader who overturned
all our assumptions,
-
made us question all the stereotypes
that we'd gone in on
-
based on 20 years of literature review.
-
[Teresea] sells clothes under a tree
in a town called Malaba
-
on the border of Uganda and Kenya.
-
You think it's very simple, don't you?
-
We'll go hang up new clothes
from the branches,
-
put out the tarp,
-
settle down,
-
wait for customers
-
and there we have it.
-
She was everything we were expecting
according to the literature,
-
to the research.
-
Right down to she was a single mom,
-
driven to trade,
-
supporting her kids.
-
So what overturned our assumptions?
-
What surprised us?
-
First, [Teresea] paid the county
government market fees
-
every single working day
-
for the privilege of setting
up shop under her tree.
-
She's been doing it for seven years,
-
and she's been getting receipts.
-
She keeps records.
-
We're seeing not a marginal,
-
underprivileged,
-
vulnerable African woman trader
by the side of the road,
-
no.
-
We were seeing somebody who's keeping
sales records for years.
-
Somebody who had an entire ecosystem
of retail that comes in from Uganda
-
to pick up inventory.
-
Someone who's got handcarts
bringing the goods in,
-
[or the] mobile money agent
who comes to collect cash
-
at the end of the evening.
-
Can you guess how much [Teresea] spends
-
on average
-
each month on inventory --
-
stocks of new clothes
that she gets from Nairobi?
-
$1,500 US dollars.
-
That's around 20,000 US dollars
invested in trade goods and services
-
every year.
-
This is [Teresea],
-
the invisible one,
-
the hidden middle.
-
And she's only the first rung
of the small entrepreneurs,
-
the microbusinesses that can be found
in these market towns,
-
at least in the larger Malaba border,
-
she's at the first rung.
-
The people further up the value chain
-
are easily running
three lines of business,
-
investing 2,500 to 3,000
US dollars every month.
-
So the problem turned out
that it wasn't the criminalization,
-
you can't really criminalize someone
you're charging receipts from,
-
it's the lack of recognition
of their skilled occupations.
-
The bank systems and structures
have no means to recognize them
-
as microbusinesses,
-
much less the fact that,
-
you know,
-
a tree doesn't have a forwarding address.
-
So she's trapped in the middle.
-
She's falling through the cracks
of our assumptions.
-
You know all those microloans
to help African women traders?
-
They're going to loan her
50 dollars or 100 dollars.
-
What's she going to do with it?
-
She spends 10 times
that amount every month
-
just on inventory,
-
we're not talking about
the additional services
-
or the support ecosystem.
-
These are the ones who fit neither
the policy stereotype
-
of the low-skilled and the marginalized,
-
nor the white-collar,
salaried office worker
-
or civil servant with a pension
-
that the middle classes
are allegedly composed of.
-
Instead, what we have here
are the [proto-esenes],
-
these are the fertile seeds
of businesses and enterprises
-
that keep the engines running.
-
They put food on your table.
-
Even here in this hotel,
-
the invisible ones,
-
the butchers, the bakers
the candle-stick makers.
-
They make the machines that make
your french fries and they make your beds.
-
These are the invisible businesswomen
trading across borders.
-
All on the side of the road,
-
and so they're invisible
to data gatherers.
-
And get mashed together
with the vast informal sector
-
that doesn't bother to distinguish
between smuggles and tax evaders
-
and those running illegal whatnot,
-
and the ladies who trade
and who put food on the table,
-
and send their kids to university.
-
So that's really what I'm asking here.
-
That's all that we need
to start by doing.
-
Can we start by recognizing the skills,
-
the occupations,
-
we could transform the informal economy
by beginning the recognition
-
and then designing the customized doorways
for them to enter or integrate
-
with the formal, with the global,
with the entire system.
-
Thank you ladies and gentlemen.
-
(Applause)